Aberrant TGF-beta function has been implicated in the pathogenesis of many diseases and it has also suggested that diminished responsiveness to TGF- beta may contribute to the process of malignant transformation. This decreased responsaiveness to TGF-beta could be caused by defects not only in TGF-beta expression of activation but also by defects in the regulation of TGF-beta receptors. We have studied several TGF-beta resistant cell lines in which Southern analysis failed to show gross deletions or rearrangements, yet in which no TGF-beta RII protein or mRNA was produced. This suggested that abnormalities in transcriptional regulation of the RII might also be found to underlie certain instances of escape from TGF-beta mediated growth inhibition. In order to identify potential transcriptional activators of the TGF- beta RII gene, we adapted the yeast one-hybrid system to find proteins that recognize the second positive regulatory element of the TGF-beta RII gene. We isolated a 2.5-kb cDNA clone that encodes a 371 amino acid novel transcription factor from a human placenta cDNA library which belongs to a novel member of the ets transcription factor family. Using constructs of the TGF-beta RII promoter linked to the luciferase gene, we have demonstrated that this transcription factor, ERT, activates transcription of the TGF-beta RII gene. A specific interaction between ERT and the TGF-beta promoter element was also demonstrated using an electrophoretic mobility shift assay. We also demonstrated that there is a good correlation between expression patterns of TGF-beta RII mRNA and ERT mRNA in human gastric cancer cell lines. Our results suggest that ERT might be a major transcription factor involved in the transcriptional regulation of the TGF-beta RII gene.